First with Financial Comment from Arabia
Prechter forecasts massive stock market crash
Elliott
Wave theorist and distinguished market commentator Robert R. Prechter
Junior is presently the top search item bringing new readers into
ArabianMoney. It is hardly surprising that his predictions are so
sought after given the extreme view for 2010:
Could the expected mild correction of 2010 really turn into a market
crash like this? The only precedent is the 1930s, and the obvious
riposte is that this time is different with the Fed in money printing
mode.
ArabianMoney wonders about this. Actually the Fed provided important
market liquidity in 1930 to no avail. And surely one of the most
notable features of the money supply expansion of the past year is that
it has not resulted in increased credit. Indeed, credit is falling, and
hence the possible implosion of the Dow Jones.
What are the safety nets available if the market goes down? Interest
rates of near zero cannot be cut to restore confidence. And if
quantitative easing has not worked so far in restoring credit, will
more of it restore confidence?
Bob Prechter sees a big deflation of all asset values, including
stocks as a logical outcome of falling amounts of credit in the global
economy. Credit puffed it up, and lack of credit works in reverse.
Whether it will be like the 1930s or a softer landing is hard to tell
but the fear factor is coming back on Wall Street.
Prechter forecasts massive stock market crash
Elliott
Wave theorist and distinguished market commentator Robert R. Prechter
Junior is presently the top search item bringing new readers into
ArabianMoney. It is hardly surprising that his predictions are so
sought after given the extreme view for 2010:
Could the expected mild correction of 2010 really turn into a market
crash like this? The only precedent is the 1930s, and the obvious
riposte is that this time is different with the Fed in money printing
mode.
ArabianMoney wonders about this. Actually the Fed provided important
market liquidity in 1930 to no avail. And surely one of the most
notable features of the money supply expansion of the past year is that
it has not resulted in increased credit. Indeed, credit is falling, and
hence the possible implosion of the Dow Jones.
What are the safety nets available if the market goes down? Interest
rates of near zero cannot be cut to restore confidence. And if
quantitative easing has not worked so far in restoring credit, will
more of it restore confidence?
Bob Prechter sees a big deflation of all asset values, including
stocks as a logical outcome of falling amounts of credit in the global
economy. Credit puffed it up, and lack of credit works in reverse.
Whether it will be like the 1930s or a softer landing is hard to tell
but the fear factor is coming back on Wall Street.